Hello all,
Pocketed a few pips before the equities open today, and then could make absolutely no sense of the rest of the NY-London session (which, granted, is still 40 minutes from being over).
Below is a 5 minute chart. This is one of the most erratic behaviors I’ve ever seen. Anyone have any ideas why? I realize that tomorrow is a big announcement so things might be erratic…
Easy scalping today. It was in an overall downtrend so every time it moved back up a few pips I’d short when it reversed back down. 11 wins, 1 loss today, 5 pip loss, 3-6 pips on each win. 
Interesting, at what time did you establish your short bias? What timeframe did you attack it from?
Around 9:30 EST. I use the 5m for the direction I want to trade then use the 1m for entries.
Thanks for the info. At what point did you begin clipping away at it, when it broke a support level? I often discover that there can be a lot of fakeout moves at the equities open.
Sounds like you have 5 pip stops, 3-6 pip TP’s. Do you use the tick chart? When do you get out?
I don’t use tick charts. I would like to try but I use MT4. I know there are ways to get them to work with MT4 but I can’t get it to work. If anyone knows how I’d really appreciate the info.
Anyway, I agree about the fake outs at the equities open you do have to be careful. I only trade EUR/USD so I have a good feel for how it moves. It just takes time to learn by concentrating on one pair, took me quite a while to learn. One thing I’ve noticed is how it reacts around big round numbers. Today it hit 1.4000. What was going to happen next is anyone’s guess. When it gets to these levels it will usually break through big time or fall hard. Today it fell so when it started falling hard I watched for short entries. As long as the 5m kept going down I watched the 1m for it to rise a little then short each time it turned back down. Just keep doing that over and over and it adds up. My stops are 5 pips and my targets are 3-5 pips, though sometimes when it’s moving well I can squeeze out another 2-3, maybe more. I usually just close around 5 but if it’s moving fast I try and let it go a little more. Some people may like to hold longer but I like the quick low risk trades and banking my pips. I’d rather get out safely then just look for another entry. I enjoy trading this way and those small wins keep adding up.
I see a nice bearish gartley forming.
eugartley.bmp (761 KB)
I would say, [U]based on the fib alignments[/U], that it’s still mainly going up until it reaches around 1.4432 area, then it could go majorly down from there as it will be 78.6% of the first triangle, and 1.27% of AB=CD extension of the 2nd triangle.
Of course the wheels on the bus go up & down, up & down, all through the chart…
You can get tick charts but they don’t go back very far. You are probably aware of this, when you click on the window to open a given pair, say EUR/USD (the window is on the left in most charts), highlight the pair you want with your mouse and just press the space bar. The bid and ask show. You can stretch this window out. It works pretty well, except it doesn’t provide you with any historical data.
Anyway, I agree about the fake outs at the equities open you do have to be careful. I only trade EUR/USD so I have a good feel for how it moves. It just takes time to learn by concentrating on one pair, took me quite a while to learn.
I’m trying to do the same exact thing actually. How long would you say it took you to get a grasp of it?
One thing I’ve noticed is how it reacts around big round numbers. Today it hit 1.4000. What was going to happen next is anyone’s guess. When it gets to these levels it will usually break through big time or fall hard.
Yes, I watch the 00’s and the 50’s a lot. I notice that when it does hit the 00’s, it will either fall just short, will print above by 2-5 pips, or surge to the 15 handle. It very often encounters a lot of resistance around 15. If it shoots comfortably above 15, its likely to hit in the 40’s.
Today it fell so when it started falling hard I watched for short entries. As long as the 5m kept going down I watched the 1m for it to rise a little then short each time it turned back down. Just keep doing that over and over and it adds up. My stops are 5 pips and my targets are 3-5 pips, though sometimes when it’s moving well I can squeeze out another 2-3, maybe more. I usually just close around 5 but if it’s moving fast I try and let it go a little more. Some people may like to hold longer but I like the quick low risk trades and banking my pips. I’d rather get out safely then just look for another entry. I enjoy trading this way and those small wins keep adding up.
So basically you stick to 1:1 risk reward. I shoot for 10 pips and aim for a 10 pip target. I got totally chopped today, I was expecting at first a reversal to long because I felt since this was a pre-NFP day the price action should be ranging. Also, when it breaks down I’m used to these 10 pip moves and 4 pip retracements. This really didn’t hit the balance well.
How long do you stay in a trade for on average? When do you step back to reassess what is happening on a broad picture? Do you slow down when it gets to a support/resistance area? How many losers in a row do you tolerate before you stop?
Thanks so much for your input…
I’ve seen people post indicators that supposedly allow you to get tick charts on the main chart but for some reason I still couldn’t get it to work even when following their directions.
I’m not really sure. I just started watching EU and after a while you get a feel for the patterns, what it does when certain candles form, how it reacts to S/R levels, round numbers, trendlines, etc. People have asked me what it is I’m looking at but I really can’t say, I just see and react now but can’t really explain it. It may take a little time but you will get a feel for what ever pair you trade if you just focus on one. I know other traders who only focus on one market, a single stock, gold, oil, e-minis or one forex pair. Concentrating on just one pair has been the best thing I’ve done for my trading.
Yeah about 1:1. I used to shoot for 10 pips but I was getting chopped up a lot. I’m not saying my style is for everyone but for me just going for 3-5 and doing over and over again has been working great.
3-5 pips shouldn’t take long if you have a good setup. It could be less than one minute or maybe 10 minutes if it’s slow.
Yes, definitely slow down when it gets to a key support/resistance level. Just wait to see if its going to break through or get rejected, then jump on board.
Two losers in a row and I quit, I know I just don’t have it that day so I end it there. When I try to continue and make back I just lose more. Better to realize it’s not my day and just take a small loss.
Yeah, I like MT 4 a lot but it can’t do everything. I actually thought IBFX’s platform was pretty cool.
I’m not really sure. I just started watching EU and after a while you get a feel for the patterns, what it does when certain candles form, how it reacts to S/R levels, round numbers, trendlines, etc. People have asked me what it is I’m looking at but I really can’t say, I just see and react now but can’t really explain it. It may take a little time but you will get a feel for what ever pair you trade if you just focus on one.
I agree with your approach. The Euro is a great instrument, its the most liquid out there probably of all tradeable markets. You could probably get away with scalping with very big size if you wanted to.
So I gather you must have tried larger timeframes, etc. Do you look at anything outside of price? I personally don’t look at anything at all, save for a few moving averages which I don’t pay attention to.
Yeah about 1:1. I used to shoot for 10 pips but I was getting chopped up a lot. I’m not saying my style is for everyone but for me just going for 3-5 and doing over and over again has been working great.
Interesting. You must use a broker with very narrow spreads, that probably makes a huge difference in your PnL.
3-5 pips shouldn’t take long if you have a good setup. It could be less than one minute or maybe 10 minutes if it’s slow.
You allow yourself to trade in slow markets, i.e. outside of London? Do you require a strong trending day, or can you handle a market in limbo?
Yes, definitely slow down when it gets to a key support/resistance level. Just wait to see if its going to break through or get rejected, then jump on board.
Okay, so you look for key S/Rs and 00 handles and let the action there tell you where your bias should be.
Two losers in a row and I quit, I know I just don’t have it that day so I end it there. When I try to continue and make back I just lose more. Better to realize it’s not my day and just take a small loss.
Very interesting, this is probably the best piece of info I’ve gotten here. I often discover my biggest weakness is that I overtrade when I get stung. I’ve decided for the time being to limit myself to 2 trades a day, one with full size, the other with half. Otherwise I go too nuts.
Agreed. I really like MT4. Though I would like to try the tick charts it does everything I need. I used to have an account with IBFX and they would be great for most people. I never had any problems but I switched because of the spreads. They’re not bad but EU is around 2 and if you’re scalping it for small profits like I am I want the smallest spread I can get. I’ll say a little more about that in your question below.
You could trade huge with EU and it wouldn’t make a difference. What I trade is nothing huge by FX standards but it’s enough for me to make a nice living. But in the grand scheme of things it’s a small blip on the radar that the big boys don’t even notice. An old trader once told me once to think of “nothing”, well the big boys look at you as less than that. 
I’ve tried larger timeframes and it just didn’t work for me, just like scalping doesn’t work for some people. That’s what bugs me when people say scalping doesn’t work and you’ll lose all your money. That is true for some people. If I believed that and stuck to the higher timeframes I would have lost all my money but I know that works for other people. You have to find a style that fits your personality.
What I look at is price action with heiken ashi instead of regular candles. Some people say they are lagging but I find that to be a good thing. It keeps me from entering a trade too soon. It really has saved me from some bad trades. I also look at to MA’s, some people think they’re a little strange but they work for me. I think these quick MA’s are great for scalping. I use a 2 SMA and a 5 SMA both with a weighted close. I also have a standard 5,3,3 stochcastic but I don’t really put a lot into that. I’ll probably end up removing it eventually. Basically I’m looking at s/r and trendlines to see which way it will possibly be moving. Then watch the 5m chart. See how those candle are forming and trade with the direction of the MA cross. I’ll try to attach an example 5m chart. Yellow MA is the 2, black is 5. So for example if the 5m MA’s cross down and there is a nice set of candles turning red then I go to the 1m and watch for the same thing to happen there and enter short.
Like I said earlier I used to use IBFX but I switched to MB Trading. I have traded stocks and options with them and really liked them. I also have two friends who trade futures with them and they really like them so when they got MT4 for forex I wanted to give them a try. Spreads are great and I couldn’t be happier with the execution. They’re an ECN and you don’t have to worry about them playing games with your trades. You’ll notice on my chart the spread indicator says 9 but they’re a 5 digit broker so that really means .9, I can’t figure out how to change that. The spread is usually less than 1.
I’m in Chicago and I’m too lazy to get up and trade during London. I’ve tried but I’m just too tired and I lost. So I start around 8:00am EST and I’m done by 12:00 EST (7:00-11:00 my time). The afternoons in the US are no good for me, too slow. Also in the evening with the Asian open, that’s no good for me either. I’ve tried, just too slow. Besides, my wife just keeps saying to turn off the damn charts! She’s right, why bother when you can trade 3-4 hours a day in the morning and make all the money you need. Then just go and enjoy the rest of your day.
Overtrading is something that happens to everyone. Your plan of two trades a day sounds like a good one. You may end up changing that in the future but stick with it to help learn discipline and get enough confidence.
One problem I’ve noticed is that people are always looking for that magic trading system. Well truth be told your tradings system really doesn’t matter. A good trader can take a bad system and make money and a bad trader can have the best system in the world and lose money. The two most important things for a trader are psychology and money management. You need the discipline to stick to your rules. That’s what I do with the two losses in a row rule. If I lose twice I’ll only lose 10 or so pips that day, no big deal. Just turn it off and try again tomorrow. So by doing this I’m following good money management and discipline rules. The problem is no one wants to lose money so they keep trying but what usually happens is they just lose a lot more. You’re not going to win every day, no good trader does. You just have to learn to accept losses, and practice good money management to keep it small.
By the way, I just noticed your name and picture. 
I like to say to myself, “I can’t wait until my size becomes a problem”
Congratulations on your achievement, I hope to join you!
I’ve tried larger timeframes and it just didn’t work for me, just like scalping doesn’t work for some people. That’s what bugs me when people say scalping doesn’t work and you’ll lose all your money.
I agree. I’ve heard numerous times that with day trading “You never make money after commissions over the long term”. I am always amused when I hear such things said with such great conviction and determination, lol.
Basically I’m looking at s/r and trendlines to see which way it will possibly be moving. Then watch the 5m chart. See how those candle are forming and trade with the direction of the MA cross. I’ll try to attach an example 5m chart. Yellow MA is the 2, black is 5. So for example if the 5m MA’s cross down and there is a nice set of candles turning red then I go to the 1m and watch for the same thing to happen there and enter short.
Thank you for the chart, that’s very helpful! Do you have a certain amount of pullback that you wait for? What happens when it starts moving real fast? Do you just sit on the sidelines?
Besides, my wife just keeps saying to turn off the damn charts! She’s right, why bother when you can trade 3-4 hours a day in the morning and make all the money you need. Then just go and enjoy the rest of your day.
Absolutely. I hope that I can make a living from 8 to 12 pm.
Overtrading is something that happens to everyone. Your plan of two trades a day sounds like a good one. You may end up changing that in the future but stick with it to help learn discipline and get enough confidence.
Yes, its tough because sometimes you lose and then such a great setup happens. But I’ve learned that the best way to get that out is to go demo.
One problem I’ve noticed is that people are always looking for that magic trading system. Well truth be told your tradings system really doesn’t matter.
My problem is creating a concrete logic to what I do. I just can’t seem to figure out sometimes how to construct a solid trading thesis, i.e. where exactly should I wait to get in, where and WHEN am I wrong? Get long at a downtick, or wait for price to confirm, etc? That is my biggest problem right now. I have some themes that pop up, but I need to work on solidifying them.
Perhaps you can reflect on how you were learning and trying to figure out the best method to scalp. Did you take notes of your trades, or at least analyze them mentally very carefully? How did you know what worked for you and what didn’t?
Again, thank you so much for sharing!
By the way, I just noticed your name and picture.
Its way better trading FX than touring with Ozzy, even if I’m just breaking even 
You can get there. Just keep learning and don’t give up. I’ve seen people I know just give up after losing money. I lost a lot of money but I didn’t give. I read the Market Wizards books and realized all good traders have lost. The difference is they kept trying. And just remember to focus on discipline, psychology and money management. Those are more important than your trading system.
No set amount for the pullback. Just watch which way the 5m is trending, the 1m may pullback then enter when it turns back to follow the trend on the 5m. If it starts moving fast, if I’m lucky enough to be in a trade at that time I’ll try to let it run. If I’m not in already I will sit on the side lines. I’ve tried to jump on board but more often than not it would stop and reverse after I entered. It’s better to just wait for things to settle down.
This is tough for me because I’ve had people want me to explain my “system” but I really can’t. I knew an old trader who couldn’t explain what he did. But his advice turned out to be priceless. He said “you need screen time”. And he was right. I just started focusing on one pair, EU, and learned its patterns and behaviors. Unfortunately I can’t say how long that will take, everyone will be different. And I’m not even sure how long it took me to start getting it.
My best explanation is to just keep following the trend and with the 1m I don’t enter on a downtick, I’ve tried but it works much better if you wait for confirmation.
Your first question goes back to my last answer, screen time. There’s really no easy way around it. Just observe the market and eventually things will start to click.
I did take notes and still do. I have a trading journal. I write down the time and price of the entry and exit and write little notes about each trade. Depending on the day I get 2-8 trades so it’s not that much. I wouldn’t even bother if I was trading 50-100 times a day like one guy I know who scalps the S&P emini’s. Having the journal is how I found out what worked for me and what didn’t.
Here’s a little tip (which actually turned out to be a big deal) that I noticed after looking over past trades in my journal. It has to do with the times you trade. I don’t know where your located but I’m in the central timezone and trade from 7:00am to about 11:00am central time, though I usually am finished by 10:00-10:30am. What I noticed was that I had losing trades from about 8:15am to 8:45am. The US stock market opens at 8:30 so now I avoid any trading during that half hour no matter how good the setup looks. Before 8:15 there is usually a “mini” trend for the day established and then during the next half hour things may get choppy. Then around 8:45am things may get back to normal. It should get back into another “mini” trend. It may continue with the previous trend or reverse so all you have to do is wait until you see which way it wants to go.
On other thing about when not to trade. I avoid any trades for 15 minutes before and after “high impact” news releases.
I’m not big on trading books but there are two I do recommend (along with the Market Wizards books)
Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader by Al Brooks
This one is a little difficult to read but it’s worth the effort. I actually read it three times. You may not want to bother with it but I highly recommend the next one.
The other is The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist by Brett Steenbarger. I found this one to be very helpful, and its easy to read. Each lesson is broken down into it’s own little chapter.
I’m also attaching a pdf on trading discipline. It’s short so I still read through it at least once a week. It’s one of the best things I’ve ever read for a short term trader.
mantra.pdf (122 KB)
I agree, that is the most vital element in any business: the ability to tolerate multiple failures. It takes the right personality to do that, and not everyone has it. The trick I think is to learn from each failure and understand that if you move to correct the mistakes, you stand a chance to succeed.
I’ve tried to jump on board but more often than not it would stop and reverse after I entered. It’s better to just wait for things to settle down.
Yes, the Euro is very big on the whole backing and filling action, so its very easy to get faked out!
He said “you need screen time”. And he was right. I just started focusing on one pair, EU, and learned its patterns and behaviors. Unfortunately I can’t say how long that will take, everyone will be different. And I’m not even sure how long it took me to start getting it.
I understand you well. The hardest thing for me is to look at the trading session, then to make definitive, quantifiable conclusions at what has happened. Its getting a bit easier with time, but proper observation and analysis is a skill I have to keep building.
I did take notes and still do. I have a trading journal. I write down the time and price of the entry and exit and write little notes about each trade.
Could you give me just a brief example of the kinds of things you like to note (outside of price entry/exit/time in trade)? What is it important for you to identify?
Depending on the day I get 2-8 trades so it’s not that much. I wouldn’t even bother if I was trading 50-100 times a day like one guy I know who scalps the S&P emini’s.
Okay, but how does the scalper improve his performance then, how does he identify his mistakes?
What I noticed was that I had losing trades from about 8:15am to 8:45am. The US stock market opens at 8:30 so now I avoid any trading during that half hour no matter how good the setup looks.
I actually notice that just before the US equities open, there is usually a good “fakeout” move somewhere. I have managed to take advantage of that successfully a number of times. Its good for like an 8 pip move.
Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader by Al Brooks
I have given it a look, very interesting - thank you!
The other is The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist by Brett Steenbarger. I found this one to be very helpful, and its easy to read. Each lesson is broken down into it’s own little chapter.
I have read his blog, very interesting stuff. I will definitely get my hands on the book, have been meaning to for a while.
I’m also attaching a pdf on trading discipline. It’s short so I still read through it at least once a week. It’s one of the best things I’ve ever read for a short term trader.
Thanks so much, this is great stuff! The philosophy is very clear and definitely something I can believe.
I’ve noticed in our conversation several things:
Also, you have put a good business model into place by scalping and using the pair with the tightest spread and a broker that offers the most competitive spread for you with reliable enough execution.
Things to think about and continually drum into my head
Hey Tony, sorry it took a while to respond.
I add things like if it’s riding a trendline or breaking a trendline,if it’s near signigicant support or resistance. If I have a losing trade I will write if I realize I made a mistake or if its just a trade that didn’t work. Even with a perfect setup they don’t always work out. I just basically keep it simple. No need to spend too much time, I just want to keep track of the trades and monitor any mistakes I make so I don’t do them again.
Have a plan and have the discipline to stick to it and you will eventually get it and be successful.
